Facebook Must Handle the Twitter Threat

Over the past two days I slowed down my blog volume to do something I hadn’t done in a while: program an application for Twitter. My programming knowledge often becomes more of a hinderance than a benefit. The reason is that I come up with ideas so often that I occasionally start to program the idea without thinking it through. Being an idea person is good if you can’t program but when you can program it can become a burden pretty quickly.

I’m not a software engineer but I know enough to be dangerous. This isn’t about me programming though. It’s about the gut reaction that took place two days ago. The great idea that I had at 2 AM was about a Twitter application, not a Facebook app. Yes, I have a few big ideas about Facebook applications as well but I’ve been increasingly considering developing apps for Twitter. The reason is that developers have access to so much data on Twitter that there are infinite opportunities to generate new advertising models. Yes, we’ve seen creative ad models on Facebook (I’ll be publishing interviews with a few new ad networks over the coming weeks), but Twitter’s API is completely transparent with few limitations (outside of the once buzzed about API limitations).

Wait, Didn’t Facebook Kill Twitter?

Yes, Facebook has opened up their status API but currently the system has proven to be limited and we’ve seen little developer uptake. So yes, my article about Facebook killing Twitter was a bit overblown. Will Facebook kill Twitter? Probably not. Could Twitter kill Facebook? No. They are two separate services and the platform of conversation is totally different.

Both are social services though and with the openness that Twitter is providing, it’s making the service a much more attractive one for a prospective developer. Not because of the reach you have, but because of the data you have access to. Figure out the Twitter system early on and you’ll soon be scaling your product for a hundred million users.

Twitter Owns the Media

Yes, when Facebook launched their platform almost two years ago, every blog couldn’t stop covering all the new Facebook applications that were launching. I couldn’t either which is why I decided to launch this site in the first place. If you look on Techcrunch every day now, you’ll see a number of new Twitter applications though, with many less Facebook applications. Just today Techcrunch posted about one of the first Twitter monetization systems, outside of the early pay-per-tweet models.

That’s not the only reason that the media is obsessed with Twitter though. The bigger reason is that the media can instantly monitor what’s taking place on the site and produce instantaneous reports, just like the New Media Strategies report which was published the morning after the oscars. Not included in the report were the discussions taking place on Facebook despite countless live feed widgets distributed around the web.

The reason? Facebook didn’t have the resources to produce the reports the day after (or chose not to) and developers didn’t have access to the much desired data that Facebook has within their locked box. This is a huge shortfall for Facebook right now and while the company is crushing Twitter, MySpace, and others when it comes to their Live Feed widget partnerships, they aren’t providing enough data for the media to create their own reports.

Facebook Must Open Up, Or Buy Twitter

Facebook needs to provide access to the aggregate data it holds under lock and key sooner rather than later. They’ve given developers a taste of what they want with the launch of the status.get API method but it’s only the beginning. Right now most of the applications on Facebook are being built around the viral channels currently available but if Facebook opens up more, there will be applications built around information, not viral distribution.

I am clearly one of Facebook’s biggest fans. I wouldn’t have invested such a large portion of my time covering the company and bet so heavily on their success if I didn’t think it was the next big thing. Let’s also be honest. Comparing a company with 175 million users to one with close to 10 million (closest estimate) is ridiculous but the hype is rapidly becoming a reality. Facebook currently has the power to take drastic action though.

Yes, the two companies are completely different animals but I honestly believe that they share a lot more then most people would say they do. As Fred Wilson said, “Hasn’t it always been about status?” We already know that Facebook wanted to buy Twitter for $500 million (a number others reported), but at the $15 billion Microsoft valuation which would give the company less than 4 percent of Facebook. The deal didn’t pan but I’d bet that we’ll see a return to negotiations in the near future.

Conclusion

Twitter is still really early on but it’s spreading like wildfire and by the end of the year I wouldn’t be surprised to see the site near the 40 million user mark or even more. Facebook is clearly in a difficult situation because they need to maintain users’ privacy but they need to take drastic action to handle the Twitter issue which is clearly a threat to their dominance of the social web.

Facebook has two options: return to the table with Twitter or open up even more and create the second wave of Facebook platform buzz. Facebook Connect still presents a huge opportunity but as we’re seeing, it takes up large resources on Facebook’s end to expand quickly when implementation is not as easy as 1,2,3. It’s becoming easier with things like the recently added comment widget but there’s still a long way to go.

No matter what, I’m still a Facebook enthusiast but if I could say anything to the company it would be this: there’s so much more that I want to build for your site. Give developers the access Twitter teases them with and then we can help continue the revolution that you started less than two years ago. That way you won’t have people like Scott Rafer saying things like he did on the Lookery blog earlier this week:

Along with several other startups, we bet that Facebook would allow third parties to use some anonymous data for ad targeting. They have not allowed it – nor have [they] enforced their [Terms of Service] which prohibits it, but we can’t build a business on the hope that FB never enforces their TOS.

Together, with or without Twitter, developers and Facebook can crack code of social media monetization. Facebook created the first social platform and created the movement behind open access to social information. Let’s take that movement to the next level.

Want to read more about the next phase of the movement? Read here and here.